The university is making the change in the wake of published reports last month that its endowment had grown almost 22 percent last year, to $17.1 billion. That sum had begun to attract attention from lawmakers who want wealthy institutions to do more to reduce tuition costs.

Financial aid also will increase to families that make more than $100,000 a year.

"Thanks to our increasingly generous financial aid program ... attending Stanford will cost less than most private and many public universities," Etchemendy said.

To pay for the new tuition assistance, the university said it will increase its annual endowment payout to 5.5 percent. The new plan, which begins in the 2008-09 academic year, eliminates the need for student loans for qualifying students.

"We are committed to ensuring that Stanford asks parents and students to contribute only what they can afford," Hennessy said. "No high school senior should rule out applying to Stanford because of cost."

Stanford is among dozens of high-end colleges and universities where tuition has grown faster than the rate of inflation and where tax-exempt endowments have increased by more than 10 percent annually.

Last month, after a report from the National Association of College and University Business Officers called attention to the swollen tax-exempt endowments, a prominent U.S. senator began to question the practice.

"They're supposed to offer public benefit in return for the privilege of tax exemption," said Sen. Chuck Grassley of Iowa, the ranking Republican on the Senate Finance Committee. "If endowments increase by double digits from one year to the next, it raises the idea that maybe these schools aren't using enough of their endowments to help students afford college."

Stanford's endowment is the third largest of any university in the country, behind only Harvard and Yale.

In the past 10 years, tuition alone at Stanford increased from $21,3000 to $34,800 - roughly $7,200 more than if it had held to the rate of inflation during the decade.

The university said 3 out of 4 students currently get some financial aid. The new program is expected to reduce the average bill paid by a student's family by 16 percent.

The university said it would continue to take into account a family's assets and overall situation, in addition to earnings, in determining the financial aid it could receive. The university said it would continue its "need-blind" admission policy, guaranteeing that students will be accepted to the university regardless of their ability to pay.

How families benefit

Stanford provided these hypothetical examples to help illustrate the impact of some of the changes to its financial aid program. In each of these cases, none of the families has assets of more than $20,000 beyond their homes.

A family of four in Massachusetts: This family has one child at Stanford, a 15-year-old in high school, a father who works as a teacher and a mother as a freelance graphic designer. The parents have a total income of $54,600, and have home equity of $275,000. The new financial aid program would eliminate the $3,800 that the parents would have been expected to pay in the current school year. Their son would no longer need to borrow $2,000, though he would still be expected to contribute his earnings from work during the summer and academic year. The total scholarship would be $45,550, an increase of $5,250 from this year.

A family of six in Nebraska: This family has one child at Stanford and three others younger than 12. The mother is a homemaker, the father an engineer, and they have a total income of $80,000 and home equity of $155,000. The new plan would cut the parents' payment in half, reducing their total payment to $5,450 from $10,965. Their child at Stanford would no longer need to borrow $1,600, though still would be expected to contribute earnings from school year and summer jobs. The total scholarship would be increased by $7,100 to $40,050.

A family of three in Silicon Valley: This family has one child at Stanford. The father is a software executive, and the mother works as a receptionist. The parents would be asked to draw less from their annual income of $120,000 total and home equity of $560,000. Their parental contribution would decrease by one-third - $8,180 - to $16,135 from $24,315. Their daughter would no longer need to borrow $1,600, but would be asked to contribute the amount equal to the earnings from part-time work during the school year and a full-time summer job. The total scholarship would be $29,400, almost $10,000 more than the previous year.

Source: Stanford University

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